Nova Measuring Instruments' Earnings Show Price Action Is on Fire

 |  About: Nova Measuring Instruments Ltd. (NVMI)
by: Christopher J. Hawkins

Nova Measuring Instruments LTD (NASDAQ:NVMI) recently posted their financial statements for year end 2010 on their company website. The statements are said to have been audited and filed with the SEC. NVMI is a producer and designer of integrated process control metrology systems. An example of one of their systems is integrated thickness monitoring for chemical mechanical polishing, which enables wafer to wafer closed loop control.

As of April 8, 2011 Nova is trading at $10.07 per share. NVMI trades on the Nasdaq, and is in the technology sector/semiconductor industry. NVMI has been experiencing excellent volume and price action since 2009, along with some of its peers like Nanometrics (NASDAQ:NANO), KLA-Tencor (NASDAQ:KLAC), and Rudolph Technologies (NYSE:RTEC). NVMI also has some nice fundamentals to back up the price action.

Nova boasts a return on equity of 46.54%, and a return on investment of 43.3%. The P/E is 11.4x, which is below the semi conductor industry average of 18x. EBITDA was 7.4 million, which makes the $12 million dollar order they received around March 2011, look like a good sign for the 246 million dollar market cap company. Total annual revenue jumped from 39 million for 12/31/09 to 87 million for 12/31/2010. There is no debt on their balance sheet and they have reported $93 million in assets as of 12/31/2010. NVMI has an EPS (TTM) of .84, that has shown a steady increase throughout 2010. Nova reported Q4 earnings of .28 on 2/15/2011. They have surprised to the upside throughout 2010 and are expected to report Q1 on 5/4/2011. Analyst estimates are around .28 cents for Q1 2011. That's a lot of info to digest in a few sentences, but there it is. The technical analysis looks as promising as the fundamentals, if not more so. Let's take a look at a couple of charts.

The one year daily chart looks like a rocket getting ready for blast off.Click to enlarge
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The weekly chart for Nova Measuring Instruments LTD paints a similar picture.Click to enlarge
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The volume vs. price action looks pretty straight forward. PE is below sector average, and if one believes the growth story, then the PE alone has a lot of room to run. My personal opinion is the evidence points to NVMI going up. The one caveat I see, is the short interest as a percent of the float, is .49%. That low of a short interest does leave room for some downward pressure. Of course, the other side of that coin, is that most people don't stand in front of a train to pick up nickels and dimes. I look forward, to looking back in April of 2012 and seeing the journey that Nova Measuring Instruments LTD has traveled.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.